Updates, advisories and surprises

(6:27 PM ET) SAN FRANCISCO (MarketWatch) -- Yahoo Inc.
YHOO
said late Thursday that it has struck a Web search agreement with Google Inc.
GOOG, -1.72%
that could be worth about $800 million in annual revenues. In a statement, Yahoo said the deal will allow it to run ads supplied by Google alongside searches on its main Web site as well as some of its other properties in the United States and Canada. The company said the deal could be worth about $800 million in annual revenue and is expected to generate between $250 million and $450 million in incremental operating cash flow in the first 12 months. The deal came after Yahoo announced that it had concluded discussions with Microsoft Corp.
MSFT, -1.70%
without reaching any sort of merger agreement.

(9:11 AM ET) NEW YORK (MarketWatch) -- Qualcomm Inc.
QCOM, -1.95%
said Thursday it was raising its third-quarter profit estimate to between 54 cents and 55 cents, up from its previous forecast of between 50 cents and 52 cents. It also said it expects revenues to be slightly above the high end of its prior forecast of approximately $2.5 billion to $2.7 billion for the quarter, which ends June 29. For all of fiscal 2008, it said it sees earnings per share to be approximately $2.09 to $2.13, compared to its prior estimate of $2.04 to $2.09.

Gasoline rises to average price of $4.06 a gallon in U.S.

(7:50 AM ET) NEW YORK (MarketWatch) -- The average price for a gallon of unleaded regular gasoline rose a penny in the last day to $4.06 a gallon, a new record, according to the Daily Fuel Gauge Report from AAA. Gasoline broke through the $4 level for the first time on Sunday and has been edging up since then. Guy Caruso, head of the federal Energy Information Administration, told Congress on Wednesday that his office expects the price to reach about $4.15 a gallon this summer.

KeyCorp to raise $1.5B in new capital, cut dividend by 50%

(7:46 AM ET) NEW YORK (MarketWatch) - KeyCorp
KEY, -1.06%
on Thursday said it will raise about $1.5 billion in new equity to offset a planned second-quarter charge of $1.1 billion to $1.2 billion related to leveraged lease litigation. The Cleveland-based bank also said it would cut its dividend by 50% to an annualized payout of 75 cents a share, beginning with the third quarter. KeyCorp said it will raise the capital by issuing common shares and non-cumulative perpetual convertible preferred stock and that the net proceeds will be used to strengthen its balance sheet and for general corporate purposes.

Genesee & Wyoming May traffic fell 2.8%

(6:46 AM ET) TEL AVIV (MarketWatch) -- Genesee & Wyoming Inc.,
GWR, -2.32%
the Greenwich, Conn., railroad operator, reported that in May traffic from continuing operations fell 2.8% to 64,036 carloads from 65,903 in the year-earlier month. The biggest sector for G&W, coal, coke and ores, saw a 1% drop in traffic for May versus a year earlier. Genesee & Wyoming operates railroads in the U.S., Canada, Australia and the Netherlands and has a minority stake in a railroad in Bolivia.

Update: Thornburg swings to 1st-quarter loss, raises capital

(6:18 AM ET) TEL AVIV (MarketWatch) -- Thornburg Mortgage Inc.,
TMA
the Santa Fe., N.M., mortgage lender, swung to a first-quarternet loss before preferred-stock dividends of $3.31 billion, or $20.64 a share, from net income of $75 million, or 62 cents, in the year-earlier period. The loss reflects unrealized market-value losses of $1.54 billion from the decline in the fair-market value of the company's mortgage-backed securities and securitized loan portfolios, Thornburg said. Analysts surveyed by FactSet Research were looking for a loss of $3.36 a share. To satisfy unmet margin calls at March 6, Thornburg entered an override agreement with five of its reverse-repurchase-agreement and auction-swap-agreement lenders. The deal gave Thornburg a 364-day reprieve from further margin calls and a reduction of margin requirements. As part of the accord, Thornburg needed to raise at least $1 billion in capital; it raised $1.35 billion, $200 million of which is held in escrow, by privately placing senior subordinated secured notes, warrants for common stock, and participations in the principal payments on a specific MBS portfolio, Thornburg said. (Fixes one spelling of the company's name and adds FactSet estimate.)

EnerSys 4th-period net up 84%, sales up 41%

(4:48 AM ET) TEL AVIV (MarketWatch) -- EnerSys,
ENS, -0.43%
the Reading, Pa., maker of industrial batteries, reported fiscal fourth-quarter net income rose 84% on 41% higher sales. For the quarter ended March 31, earnings reached $19.5 million, or 39 cents a share, from $10.6 million, or 22 cents, in the year-earlier period. Adjusted net was 42 cents a share versus 22 cents. Shares outstanding rose 4.9% to 49.9 million. Sales rose to $581.9 million from $413.6 million. For fiscal 2009, EnerSys now expects to earn an adjusted 45 cents to 49 cents a share; the previous estimate was 40 cents to 44 cents. The company also said it began a plan to refinance its debt and credit lines to cut its cash interest costs.

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